LONDON - A global index of stock markets dipped on Monday as a report that China wants more talks before signing a "Phase One" trade deal with the United States tempered an initial burst of optimism that followed signs of progress last week.
Stock markets in Asia cheered U.S. President Donald Trump's outlining the first phase of an agreement to end a trade war with China and suspending a threatened tariff hike.
But data showing a further contraction in Chinese imports and exports in September and a Bloomberg report that China wants further talks with the U.S. before signing Trump's Phase One deal hit risk sentiment in Europe.
The pan-European STOXX 600 index <.STOXX> was down nearly 1% by midday in London. Germany's DAX <.GDAXI>, dominated by companies exposed to China, slipped 0.7%. All European country indexes were in the red. [.EU]
MSCI's All-Country World Index <.MIWD00000PUS>, which tracks shares across 47 countries, was down 0.1% on the day.
The emerging trade deal, covering agriculture, currency and some aspects of intellectual-property protection, would represent the biggest step by the two countries in 15 months. But investors advised caution.
"While a positive development, we are not absolutely certain that this marks the start of a clear de-escalation of the trade dispute," said Mark Haefele, chief investment officer at UBS Global Wealth Management. A number of issues were unresolved or unclear, in his view.
"A delay to the scheduled December tariffs was not announced, although that's likely if a deal is reached, and the state of provisions on intellectual property, forced technology transfer, and Chinese state subsidies, the most difficult aspects of the negotiations, are still unclear."
Liquidity was also lacking with Japan off and a partial market holiday in the United States for Columbus Day.
Australia's main index gained 0.54% <.AXJO> and South Korea <.KS11> rose 1.11%. Shanghai blue chips <.CSI300> added 1%.
E-Mini futures for the S&P 500 <ESc1> were down 0.2% after rising on Friday.
The drag from the trade war was a major reason Singapore's central bank eased monetary policy on Monday for the first time in three years. Data showed the city-state's economy had only narrowly dodged recession.
BIG WEEK FOR BREXIT
The progress on trade was still enough to hit safe-haven bonds. Yields on U.S. 10-year Treasury notes rose to 1.7530% <US10YT=RR>.
The yield curve also steepened as short-term rates were held down by news the Federal Reserve would start buying about $60 billion per month in Treasury bills to ensure "ample reserves" in the banking system.
The fading rally in risk assets as European markets opened saw the Japanese yen regain ground against the dollar. The currency was 0.3% higher to the dollar at 108.03 <JPY=>.
The dollar <.DXY> gained 0.15% against a basket of currencies.
Sterling fell over half a percent to $1.2550 <GBP=>, retreating from a 15-week high of $1.2708 on Friday on optimism Britain could reach a deal on Brexit with the European Union.
A Brexit deal was hanging in the balance on Monday after diplomats indicated the EU wanted more concessions from Prime Minister Boris Johnson and that a full agreement was unlikely this week.
Spot gold gained 0.4%, last trading at $1,494.68 per ounce <XAU=>.
Oil prices fell more than 2%.[O/R] Brent crude <LCOc1> futures fell 2.23% to $59.16 a barrel. U.S. crude <CLc1> lost 2.23% to $53.48 a barrel.